Oversea-Chinese Banking Corp (OCBC) reported a net profit of S$466m for 2Q09, above our forecast of S$398m due mainly to lower provisions for nonperforming loans (NPLs) and higher non-interest income.
NPL formation has slowed. NPLs increased 14.3% qoq to S$1,628m due to the manufacturing, general commerce and transport & communications sectors. By geographical region, new NPLs came from the core Singapore and Malaysia markets. The increases in NPLs came from loans that were not overdue. We take this as a sign of conservative management in recognising NPLs early. In fact, NPLs in the doubtful and loss categories have declined. Management commented that the inflow of NPLs has slowed across key markets.
Benefitting from surge in home sales. OCBC is the prime beneficiary of buoyant sales for private residential properties. Approvals for housing loans doubled qoq in 2Q09. OCBC has so far approved S$600m of SME loans under the Special Risk-Sharing Initiative (SRI) administered by Spring Singapore. We have raised our assumptions for loans growth to 1.6% for 2009 (previous: 2.6%) and 11.7% for 2010 (previous: 8.2%) to factor in increased demand from property developers and housing loans.
We have revised our assumptions based on trends in NPL ratios over the last three quarters. We have assumed NPL ratio will hit 3.8% by end-10 (previous: 4.2%). Our earnings model has imputed allowance for credit losses of 80bp in 2H09 (previous: 95bp) and 60bp in 2010 (previous: 70bp). We have raised our 2009 and 2010 net profit forecasts by 0.9% and 4.1% respectively. Maintain BUY. Our target price of S$9.15 is based on a P/B of 1.72x derived from the Gordon Growth Model (ROE: 12%, payout ratio: 48%, required return: 8% and constant growth: 4.5%).
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261-280 of 284
Waiting to buy...
http://www.finanznachrichten.de/nachrichten-2009-08/14791784-singapore-hot-stocks-dbs-ocbc-in-focus-on-downgrades-020.htm
Bought today at $7.75...
No $9.00 No SELL
Love your forecast. 
leoleo ( Date: 31-Aug-2009 11:38) Posted:
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I just bought 2 lots. Hope this is a winner.
Who dare to buy ocbc will be big winner tomoro if dow green tonite.maybe late afternoon it will recover back to $8 ..
DJ MARKET TALK: OCBC +0.5%; Buy Ahead Of Ex-Div Date - CIMB
0412 GMT [Dow Jones] OCBC (O39.SG) +0.5% at S$8.02, tracking modest gains by most other blue chips after pullback in early trade. CIMB expects stock to go higher ahead of Aug. 31 ex-dividend date (bank paying dividend of S$0.14/share Oct. 22); "based on the share price performance in the past five years, traders might find some profit in buying ahead of ex-dividend trading and selling on the ex-dividend date." Tips immediate technical resistance at S$8.45-S$8.55, followed by S$8.70-S$8.80. On fundamentals, house expects earnings improvement in coming quarters on back of lower provisioning charges, higher contributions from insurance arm Great Eastern Holdings (G07.SG), easing credit concerns. Rates at Outperform with S$8.11 target. Current buying interest tame as volume light. (FKH)
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*DJ OCBC Target Raised To S$8.80 From S$8.00 By Citigroup
24 August 2009 09:16 |
DJ MARKET TALK: Citi Raises Great Eastern Target 25.4% To S$15.30
0308 GMT [Dow Jones] STOCK CALL: Citigroup raises Great Eastern Holdings (G07.SG) target price to S$15.30 from S$12.20 on improving outlook. "Recovery of equity, and stabilization of debt markets should lift GEH's performance, and we now view 1Q09 was the cycle trough for premium sales and new business value." Keeps at Buy. Notes possible divestment of 30% of GE Life Malaysia would result in loss of about S$43 million in income contribution, based on FY08 profit, but may generate over S$490 million in sale proceeds. Says low-yield environment, more market-sensitive premium growth, competition and volatile markets making it more challenging to drive consistent earnings, but adds, "We believe GEH remains a well-managed, financially strong company, which may have potential to become a more active capital management play." Shares +1.3% at S$13.68; STI +2.0%. (LES)
Monday, August 17, 2009
| Nomura maintains ‘buy’ call for OCBC with $8.10 price target |
| Written by The Edge Singapore |
| Wednesday, 05 August 2009 09:48 |
Nomura has maintained its “buy” call for OCBC Bank with a price target of $8.10.
“Adjusting for 1Q09’s $175mn in one-off insurance-related gains, OCBC’s 1H09 recurrent earnings of $836mn (2Q: $466mn) were 17% ahead of Nomura and consensus estimates on an annualised basis,” says analyst Anand Pathmakanthan.
“Sluggish net interest income was mitigated by non-interest income (NII) traction and undershooting credit costs, while BV was boosted by a greater-than-expected S$640mn
mark-to-market gain for the AFS securities book. Our forecasts and PT are under review with a positive bias.”
| Updated: 3rd August 2009, 1250 hrs | |||
| OCBC's Q2 profit rises 10% on-year to S$466mil | |||
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OCBC Bank says its second quarter net earnings rose 10 percent to 466 million dollars boosted by higher interest and non-interest income. The earnings were higher than the average forecast of 387 million dollars by analysts polled by Dow Jones News Wires. Net interest income edged up 5 percent to 710 million dollars in the three months to June while non-interest income rose 37 percent to 494 million dollars, led by higher insurance income and trading gains. Banking analyst of the Royal Bank of Scotland, Trevor Kalcic, says while the bank posted a good bottomline at the net profit level, the operating performance was less impressive. "The actual operating level came in 6.2 percent below my own forecast. It's going to be very hard for them to improve, first of all, because there's no loan growth, either at OCBC or in the Singapore market as a whole. And secondly, if you look at the performance in the second quarter, certainly there was a very very weak performance on the net interest margin. Now I think some of that will carry on in the quarters ahead." Mr Kalcic adds however that allowances for the quarter came in lower than expected. Allowances for loans and other assets were 104 million dollars for the quarter. That's up 88 percent from a year ago, but down from 197 million in the first quarter. The bank saw its non-performing loans ratio rise to 2.1 percent in the second quarter, up from 1.8 percent in the previous quarter. This was mainly due to an increase in bad loans from the manufacturing and transport sectors. OCBC CEO David Conner says the bank's asset quality remains sound and capital ratios remain strong. He adds that the lender will continue to be disciplined and prudent as it strives to grow its customer businesses in key markets. |
DJ MARKET TALK: OCBC May Trim Losses; 2Q Beats Market Forecast
0541 GMT [Dow Jones] OCBC (O39.SG) may pare losses tad after 2Q09 results, released over midday break, beat market expectations. But potential for shares to receive big boost from positive earnings surprise is somewhat capped by their recent strong performance (+55% year to date), which has already priced in expectation of improving earnings performance. Order book quotes show buying interest up to S$7.86; shares down 1.4% at S$7.71 at midday break. Bank says in statement 2Q09 net profit +10% on-year at S$466 million, driven by growth in net interest income, higher insurance income, lower expenses. Result some way ahead of Dow Jones Newswires analyst poll average forecast for 2Q09 net profit to fall 9% on-year to S$387 million. Bank's outlook statements pointed to improving macro economic backdrop, but with note of caution; "there is growing consensus that the worst is over for the global economy and global financial markets, but the pace of recovery remains uncertain." (KIG)
DJ MARKET TALK: DB Upgrades UOB To Buy, Raises DBS, OCBC Targets
0350 GMT [Dow Jones] STOCK CALL: Deutsche Bank upgrades UOB (U11.SG) to Buy from Hold, raises target price to S$20.30 from S$14.50. Raises DBS (D05.SG) target price to S$16.50 from S$14.00, maintains Buy rating. Raises OCBC (O39.SG) target price to S$8.10 from S$5.80, maintains Hold rating. Says rating change, higher target prices reflect better long-term growth prospects on more-benign economic outlook. Tips further upside for Singapore banks' share prices, driven by earnings upgrades on equity market rebound, normalizing loan losses and valuation multiple expansion; "despite recent share price strength, we see further upside from current levels." Notes Singapore banks tend to deliver strong absolute and relative share price performance in year following a trough in GDP growth, analysis of historical trends suggests more than 20% upside to current valuation multiples. DBS flat at S$13.88, OCBC down 1.3% at S$7.72, UOB off 0.9% at S$17.52 vs STI off 0.1%. (KIG)
| OCBC to take $218m Q3 hit on insurer losses |
| Written by Thomson Reuters |
| Friday, 31 July 2009 20:02 |
Singapore’s Oversea-Chinese Banking Corp (OCBC.SI) said it will take a hit of $218 million in the third quarter after its insurance unit announced it will redeem its policy holders’ credit derivatives at a loss.
Great Eastern (GELA.SI) is making a one-time redemption offer to its policy holders on products with underlying investments in collateralised debt obligations (CDOs), badly hit by the credit crisis. That will result in a loss of $250 million to the insurer in the third quarter, the statement said late today.
OCBC, the smallest of Singapore’s three listed banks, said it does not expect the $218 million charge to affect its continuing profitability, business fundamentals or capital position.
OCBC will announce its second quarter results on Aug 3.
DJ MARKET TALK: HSBC Upgrades OCBC To Neutral From Underweight
0713 GMT [Dow Jones] STOCK CALL: HSBC upgrades OCBC (O39.SG) to Neutral from Underweight on view life insurance business in Great Eastern Holdings (G07.SG) will be bank's key growth driver for rest of 2009. Says Great Eastern's 1Q09 results, while partly boosted by non-recurring gains in Malaysia, suggest worst over for insurance business. Expects Great Eastern to account for 17% of OCBC's total FY09 income vs 10% in FY08; "its embedded value should also rebound given the higher prospective investment returns and the greater popularity of traditional life products." Tips OCBC as major beneficiary of Singapore's real estate market recovery as its loan growth in last few years driven mainly by property-related lending. Raises target price to S$7.50 from S$5.80, based on 1.35X P/B vs 1.20X previously, raises FY09-10 earnings forecasts by 4%, 22% to S$1.29 billion, S$1.64 billion respectively. Stock +1.2% at S$7.84; STI +0.6%. (FKH)
| Updated: 29th July 2009, 1942 hrs |
| OCBC successfully completes first yuan-denominated trade |
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OCBC Bank says it has successfully completed the first Chinese yuan-denominated trade transaction. It has also opened the first yuan account under its pilot run. OCBC was the first Singapore bank to participate in China's yuan trade settlement pilot program as China seeks to promote the yuan as an international currency. It's amongst Bank of China's first batch of 11 overseas participating banks in this pilot program. The Singapore bank says with the successful pilot run, its customers can now open a yuan account as well as settle their trade transactions in yuan as early as mid-August. The first trade transaction settled in yuan by OCBC was for the sale of spare parts by mainboard-listed Kian Ann Engineering to a China trading company. |
DJ MARKET TALK: Better Days Ahead For Singapore Banks - BoA-ML
0843 GMT [Dow Jones] Outlook for Singapore banks has improved as pickup in city-state's GDP in 2Q09, increased property transactions reaffirm economy is past trough, paving way for better-than-expected earnings, says Bank of America Merrill Lynch. Notes number of condo units sold in 2Q09 doubled on-year, +81% on-quarter to 4,700 units. Lowers NPL forecasts for all three banks to 3% by December 2009 from 4% previously, to 4% by end-2010 from 5%; "channel checks suggest that asset quality is holding up well on a sequential basis. While we still expect NPLs to peak in 2010, we believe that NPL formation will moderate going forward. This should lead to lower credit costs ahead." Upgrades DBS (D05.SG) to Buy from Neutral with higher target of S$17.95 vs S$12.50 previously, OCBC (O39.SG) to Buy from Neutral with S$9.50 target vs S$7.25; keeps UOB (U11.SG) at Buy with new target of S$19.55 vs S$15.55. DBS +1.6% at S$12.58, OCBC +2.1% at S$7.29, UOB +1.0% at S$16.22. (FKH)
By AmFraser on 21 Jul.
Investment Highlights
Interim results from 3 August. The 2Q09 results season will kick off with OCBC’s report on 3 August, to be followed
by United Overseas Bank (UOB) on 5 August and then DBS Group Holdings on 7 August. We do not expect major
surprises. Provisions will be the key swing factor. Overall, net profit (excluding one-off items) should show positive QoQ
improvements in 2Q09.
Improvement in QoQ profit expected. Except for OCBC, we expect all three local banks to report a QoQ net profit rise
in 2Q09. OCBC is expected to show a lower QoQ 2Q09 net profit because of its one-off S$175mil gain (net of tax and
minorities) from the group’s 87%-owned Great Eastern Holdings recorded in 1Q09. Excluding this gain, OCBC should
also see higher net profit in 2Q09 compared to the previous quarter. But 1H09 results of the three banks are still expected
to show a YoY decline compared to 1H 2008 given much higher provisions made in 1H09.
Flat QoQ net interest income expected. Local banks are expected to report flat QoQ net interest incomes on the back
of stable net interest margins and flat YTD loan growth. While interest spreads have widened on repricing of some loans,
net interest margins may be weighed down by low S$ interbank rates in 2Q09. However, given a steepening in the positive
yield curve (following the sharp rise in long-dated Government bond yields), there could have been opportunities for
gapping profits in 2Q09.
Muted loan growth. We note that while industry housing loan growth has been very encouraging (+2.6% YTD as of May
2009), overall loan growth for the industry up to May 09 is still negative (-0.5% YTD). Lending to the commerce sector
is still very weak, with YTD loan growth of negative 10.1% as of May 2009. But we think that with the downsizing in some
foreign banks, local banks may have gained market share, particularly DBS. Hence, we think DBS would be likely to
show highest loan growth among local banks.
Positive surprise may come from other income. Fees and commissions are expected to show marginal QoQ
improvement as a result of higher brokerage income from more buoyant stock markets. One potential positive surprise
could come from the banks’ other income or treasury income. We have been more conservative in our assumptions
of local banks’ other income, which includes income from customer flows in interest rate and foreign exchange
instruments - and the banks’ own proprietary book. Given the improvement in equity prices, these banks could have
booked in higher gains from their trading portfolios in 2Q09.
Provisions could be lower-than-expected. Non-performing loans are expected to have risen in 2Q09 although we do
not expect a sharp deterioration in the quality of the banks’ loan book. Local banks are expected to continue setting aside
substantial provisions in 2Q09. But we think loan provisions for 2009 by DBS and UOB might be slightly lower - QoQ
- given hefty amounts set aside in 1Q09. OCBC may report higher a QoQ rise in provisions given its low base in 1Q09.
Positive marked-to-market (MTM) adjustments. With the recovery in capital market prices since the lows in March
2009, we would expect to see positive marked-to-market adjustments for the banks’ available-for-sale portfolios in
2Q09. Note that any positive MTM adjustments to the banks’ AFS portfolios - in the case of UOB, which will be markedto-
model - would be made as a direct adjustment to equity and will help to boost BVs. UOB could possibly be the biggest
beneficiary as it has the largest proportion of its AFS portfolio in equities and bonds (UOB: 60.2% as at December 2008
versus slightly more than 40% for the other two local banks).
Loan growth to pick up in 2H 2009. We expect loan growth in Singapore to improve in the second half of the year. One
reason is that the buoyant sales in recent primary residential market launches (with 7,367 units sold in 1H 2009) will
translate to loan drawdowns from 2H 2009 onwards. We would also expect loans to the manufacturing sector to pick
up with the success of the Government’s sponsored SME loans under the SPRING scheme.
Reiterate our OVERWEIGHT call. We maintain our BUY calls on DBS, OCBC and UOB. Share prices of local banks are
still below our fair values as derived from the Gordon Growth model. We think that there could be room for an earnings
upgrade especially if the banks’ 2Q09 results were to turn out to be better-than-expected - and also if Singapore’s
domestic economy continues to recover. We will soon be raising our GDP forecast to between -4% and -5% from an
earlier forecast of -6% after Singapore’s positive 20% QoQ GDP growth in 2Q09.
Can buy or not is your own call. DYODD.
OCBC will be reporting their earning result at 1st wk of Aug.
Can buy in at current price???...pls advice.
From the low of $3.95 in Mar09, wavelet 1 went up by $1.90 to $5.85, wavelet 2 down to $5.31, wavelet 3 went up by $2.13 to $7.44, wavelet 4 went down to $6.48. Hopefully wavelet 5 goes up to $8.84.